If a perfectly competitive firm achieves productive efficiency then
A)it will raise its price in order to earn an economic profit.
B)the price of the good it sells is equal to the benefit consumers receive from consuming the last unit of the good sold.
C)it is producing at minimum efficient scale.
D)it is producing the good it sells at the lowest possible cost.

Question

Quizplus · Accepted Answer

Productive efficiency occurs when a firm produces a good at the lowest possible cost. Therefore, the correct answer is D. Option A is incorrect as a perfectly competitive firm will not raise its price if it achieves productive efficiency, as there is no economic profit to be earned. Option B is incorrect as the price of a good in a perfectly competitive market is determined by the market and not by the benefit consumers receive. Option C is incorrect as minimum efficient scale is the level of output at which a firm can produce at the lowest possible cost in the long run, but productive efficiency can be achieved at any level of output.

If a Perfectly Competitive Firm Achieves Productive Efficiency Then